How much to put down on a condo - 20% or 25%?

Asked by Lostinla, Los Angeles, CA Wed Dec 7, 2011


we are looking at buying a condo - it will be a short sale and, unfortunately, we are not able to get better than the bank's asking price or get the seller/bank to pay for repairs or remodeling. The bank will foreclose the property in a few weeks so we don't want to miss out on this, which is a reasonably good deal.

Our interest rate is going to be 4.625% on a 20% down and 4.375% on a 25% down - $108 dollars less a month. We have the money for the 25% but would not be able to make as many upgrades to the property immediately. We are debating whether it is worth taking the higher interest rate and having more money to spend or to just pay the 25% down, as at least the money goes towards equity.

Any advice on this would be appreciated. Also, would anyone recommend walking away from this deal, knowing that we want it, and hoping that the bank would be more flexible if they walk and are threatened by foreclosure?

Thanks for the advice!

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Kieran Jacks…, Agent, West Hollywood, CA
Thu Feb 23, 2012
Out of curiosity, what has YOUR agent advised you to do?

All the best,
0 votes
Robert Chome…, , San Diego, CA
Thu Dec 8, 2011
I would put 20% down and keep the rest for renovation. It's such a small difference in monthly payment and interest is deductible.
0 votes
Shawn Ryan R…, Agent, Belleville, NJ
Thu Dec 8, 2011
Those interest rates sound high.
0 votes
, ,
Wed Dec 7, 2011

Here is additional information regarding financing requirements for condominium projects that may be of interest:

Happy funding, Rudi
Web Reference:
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Jonathon Vil…, Agent, Pico Rivera, CA
Wed Dec 7, 2011
I always tell me clients keep as much money as you can as and put the least amount down. It just makes more sense in the long run. Chances are you won't live in this home for the life of the loan and if you are comfortable with the payment with less down then go for it. Really think about..."this is a great home, great price but is $108 a month going to break me? and how long will it take to be able to save $10,000 that we need for repairs(close to 7 years!) now ask yourself, would you rather pay a higher interest rate and live in the home that is more built for you or living in the home the way it is because you wanted to save $108/mo?

Jonathon Villaescusa
Excellence Real Estate
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0 votes
Joshua Rabin…, , Los Angeles County, CA
Wed Dec 7, 2011
Put the amount that you feel most comfortable with. Make a chart and see which would be more appealing to you. As always, putting more down would increase your equity in the property. I would also advise you consult a certified tax consultant who could help you out with the accounting . Best, Joshua Rabinovitz.
0 votes
Bill Eckler, Agent, Venice, FL
Wed Dec 7, 2011

When presenting your initial offer it's always good to provide a deposit's amount that will allow you to be taken seriously as a real buyer. It's also important that you don't float too large an amount out there to be tied up should things not work out.

Between the negotiation process and the lender the final deposit will likely be a number that all three parties find acceptable.

Good luck,

0 votes
Ron Thomas, Agent, Fresno, CA
Wed Dec 7, 2011
It sounds like you have all the information, now you have to fill in the blanks:
Ever heard of a Ben Franklin Balance Sheet?
Take a tablet, draw a line down the middle. On the left heading, put 20% and on the right, put 25%.
Now, just list all the reasons for one or the other; really reach for it, think of everything!
Which list is longer?

Good luck and may God bless
0 votes
Anna M Brocco, Agent, Williston Park, NY
Wed Dec 7, 2011
Unfortunately only you can decide the downpayment amount based on your financial comfort level. Keep in mind that short sales are sold as is, and generally lenders don't agree to make or credit any repairs. As for purchasing, or walking away, again a decision only you can make based on your finances, wants, needs, lifestyle, will you be happy living there, etc.
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